UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 39052 / September 11, 1997 ACCOUNTING AND AUDITING ENFORCEMENT Release No. 958 / September 11, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9405 ______________________________ : In the Matter of : ORDER INSTITUTING PUBLIC : PROCEEDING AND OPINION AND DOUGLAS R. COATES, CPA, : ORDER PURSUANT TO RULE 102(e) : OF THE COMMISSION'S RULES OF Respondent. : PRACTICE ______________________________: I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and they hereby are, instituted against Douglas R. Coates ("Coates" or "Respondent") pursuant to paragraph (3) of Rule 102(e) of the Commission's Rules of Practice [17 C.F.R.  201.102(e)(3)].<(1)> II. In anticipation of the institution of these proceedings, Coates has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying the Commission's findings contained herein, except the Commission's finding that a Final Judgment of Permanent Injunction and Other Equitable Relief has been entered against him as set forth in Paragraph III., which is admitted, <(1)> Paragraph (3) of Rule 102(e) provides, in pertinent part: The Commission, with due regard to the public interest . . . may . . . suspend from practicing before it any . . . accountant . . . who has been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violating . . . any provision of the Federal securities laws or of the rules and regulations thereunder. Coates consents to the entry of this Order Instituting Public Proceedings and Opinion and Order Pursuant to Rule 102(e) of the Commission's Rules of Practice ("Order"). III. FINDINGS On the basis of this Order and the Offer of Settlement submitted by Coates, the Commission finds<(2)> that: A. Coates, age 39, is and has been since 1984 a certified public accountant in the state of Ohio. He was controller and vice president of Future Healthcare Inc. ("Future Healthcare") from 1992 until April 14, 1995. B. Future Healthcare, an Ohio corporation with its principal place of business in Cincinnati, Ohio, was at all relevant times in the business of conducting clinical trials for new drugs. Future Healthcare's common stock became registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act 1934 ("Exchange Act") in December 1992. From December 1992 through the times relevant to the allegations herein, Future Healthcare was required to file reports with the Commission pursuant to Section 13(a) of the Exchange Act. In December 1995, the company sought protection under Chapter 11 of the Bankruptcy Code after its primary lender seized substantially all of its tangible assets. Future Healthcare presently has no operations, employees or assets other than potential legal claims. C. On August 27, 1997, the Commission filed a complaint against Coates and others in SEC v. Timothy Ross, et al., Civil Action No. C-1-97- 770.<(3)> On August 27, 1997, Coates consented to the entry of a Final Judgment of Permanent Injunction and Other Equitable Relief ("Final Judgment"), without admitting or denying the allegations in the complaint, except as to subject matter jurisdiction, which he admitted. On August 27, 1997, the United States District Court for the Southern District of Ohio entered the Final Judgment, which permanently enjoins Coates from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Exchange Act and Rules 10b-5 and 13b2-1 promulgated thereunder, and orders him to disgorge trading losses avoided of $25,000. D. The Commission's complaint filed in SEC v. Timothy Ross, et al. alleges, among other things, that from at least 1992 and continuing through <(2)> The findings herein are made pursuant to Coates' Offer of Settlement and are not binding on any other person or entity named as a respondent in this or any other proceeding. <(3)> See SEC v. Timothy A. Ross, et al., Litigation Release No. 15460. ======END OF PAGE 2====== 1995, Future Healthcare inflated its revenue and earnings by recognizing both premature and fictitious revenue. The complaint further alleges that Coates knew or was reckless in not knowing that Future Healthcare's financial statements were materially false and misleading and that Coates, at Ross's direction, made false accounting entries to Future Healthcare's books and records to conceal the overstatement of revenue and earnings. In addition, the complaint alleges that Coates sold Future Healthcare stock while in possession of material, non-public information about the accuracy of Future Healthcare's financial statements. IV. ORDER IMPOSING SANCTIONS Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement submitted by Coates and accordingly, IT IS HEREBY ORDERED, effective immediately, that: 1. Coates is denied the privilege of appearing or practicing before the Commission as an accountant. 2. Five years from the date of this Order, Coates may apply to the Commission by submitting an application to the Office of the Chief Accountant which requests that he be permitted to resume appearing or practicing before the Commission as: a. a preparer or reviewer, or a person responsible for the preparation or review, of financial statements of a public company to be filed with the Commission upon submission of an application satisfactory to the Commission in which Coates undertakes that, in his practice before the Commission, his work will be reviewed by the independent audit committee of the company for which he works or in some other manner acceptable to the Commission; b. an independent accountant upon submission of an application containing a showing satisfactory to the Commission that: i. Coates, or any firm with which he is or becomes associated in any capacity, is and will remain a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section") as long as he appears or practices before the Commission as an independent accountant; ii. Coates or the firm has received an unqualified report relating to his or the firm's most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section; and iii. Coates will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education, as long ======END OF PAGE 3====== as he appears or practices before the Commission as an independent accountant. c. The Commission's review of any request or application by Coates to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Coates' character, integrity, professional conduct, or qualifications to appear or practice before the Commission. By the Commission. Jonathan G. Katz Secretary ======END OF PAGE 4======